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You had multiple things wrong. Your PHP has not had GD2 support for at least since January 2006 when it was last compiled yet you had your image processor set to GD2 and you inputted a filename to a watermark file without setting the full server path to it thus your images would not show and your uploads did not work
Your images should be viewable now I set the processor to imagemagick and filled out the path to that variable so the issue here is setting things to use a watermark the program could not find and also for it to use a image processor that did not exist broke your install
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